a.
A
average rate of return = (500+400+300+200+100)/5/1000*100% =30%
B
average rate of return = (200+200+300+400+400)/5/1000*100% =30%
C
average rate of return = (500+200+200+100+50)/5/500*100% =42%
Project C is the best because 42%>30%
b.
The best is discounting rate of 10%
A
FV = (1000-500*1.1+400*1.12+300*1.13+200*1.14+100*1.15)/1000*100% =156%
B
FV = (1000-200*1.1+200*1.12+300*1.13+400*1.14+400*1.15)/1000*100% =225%
C
FV = (500-500*1.1+200*1.12+200*1.13+100*1.14+50*1.15)/500*100% =114%
The best is B
c.
Factors affecting the project selection process:
1) reliability of preliminary calculations of benefits, costs and probability of project success;
2) the technical quality of the project is determined by a subjective rating, which identifies five factors:
• clarity of project objectives;
• extent of technical obstacles;
• extent of existing institutional or market barriers;
• adequacy of the skill level of existing personnel and technical equipment;
• if the project is successful, how easy it is to find a new technology, process or service;
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